Last week, U.S. House Financial Services Committee Chairman Spencer Bachus (R – AL), decided to at least temporarily put the Investment Adviser Oversight Act of 2012 (“Investment Adviser Oversight Act”) on hold. This decision came on the heels of Representative Maxine Waters’ (D – CA) introduction of the Investment Adviser Examination Improvement Act of 2012 (“Investment Adviser Examination Improvement Act”).
Category Archives: SRO
Representative Maxine Waters (D – CA) introduced the Investment Adviser Examination Improvement Act of 2012 (“Investment Adviser Examination Improvement Act”) on July 25, 2012. The Investment Adviser Examination Improvement Act enables the U.S. Securities and Exchange Commission (“SEC”) to charge user fees from investment advisers. The Investment Adviser Examination Improvement Act is a response to the Dodd-Frank Wall Street Reform and Consumer Protection Act which requested more stringent and frequent examination of investment advisers.
The National Association of Personal Financial Advisors (NAPFA) recently released a statement on the potential negative effects of H.R. 4624, the Investment Adviser Oversight Act of 2012, (Investment Adviser Oversight Act). NAPFA says this bill will “allow the foxes to run the henhouse.” NAPFA is alluding to the belief that if the bill is passed and a self-regulatory organization (SRO) is created for investment advisers, it will be the Financial Industry Regulatory Authority (FINRA).
H.R. 4624, the Investment Adviser Oversight Act of 2012, (“Investment Adviser Oversight Act”) proposes creating a self-regulatory organization (“SRO”) for investment advisers. Currently, the U.S. Securities and Exchange Commission (“SEC”) has primary oversight of federally registered investment advisers and state securities regulators have primary oversight of state-registered investment advisers. As a result of the Dodd–Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), state securities regulators have begun serving as the primary regulator for investment advisers with up to $100 million of assets under management. Those investment advisers with more than $100 million are regulated primarily by the SEC. The Investment Adviser Oversight Act, if passed, creates an SRO for all investment advisers to report to, including those at the state level. H.R. 4624 as it stands now would also require state securities regulators to report to an investment adviser SRO annually to make sure that the states are meeting standards.
Highlights from the Financial Services Committee’s Hearing on the SRO Bill for Investment Advisers
June 06, 2012
This morning the Committee on Financial Services of the U.S. House of Representatives (“Financial Services Committee”) held a hearing on the Investment Adviser Oversight Act of 2012 (“Investment Adviser Oversight Act”). The Investment Adviser Oversight Act proposes the creation of a self-regulatory organization (“SRO”) for investment advisers. The panel of witnesses for the hearing consisted of representatives from the Financial Services Institute (“FSI”), the National Association of Insurance and Financial Advisors (“NAIFA”), the Securities Industry and Financial Markets Association (“SIFMA”), the Financial Industry Regulatory Authority (“FINRA”), the North American Securities Administrators Association (NASAA), and the Investment Adviser Association (“IAA”).
Results of Massachusetts Securities Division Survey Finds Heavy Toll if New Investment Adviser SRO Adopted
June 06, 2012
The Massachusetts Securities Division (“Division”) recently conducted a survey to determine the possible impact of the proposed Investment Adviser Oversight Act of 2012 (“Investment Adviser Oversight Act”) which was introduced in the United States House of Representatives by Representative Spencer Bachus (R – AL) Chairman of the Financial Services Committee. If enacted the Investment Adviser Oversight Act would create a self-regulatory organization (“SRO”) for investment advisers. The Massachusetts Securities Division’s survey was sent out to 649 investment advisers, and the Division received 353 surveys back. Responses came from a wide spectrum of investment advisers in the state.
GAO Report Finds SEC Oversight of FIRA Lacking & Critics Use Report Against FINRA as Potential Investment Adviser SRO
June 05, 2012
The U.S. Government Accountability Office (“GAO”) recently released a report on the U.S. Securities and Exchange Commission’s (“SEC”) oversight of the Financial Industry Regulatory Authority (“FINRA”). The report examined “how the SEC conducted oversight of FINRA and how it plans to enhance oversight in the future.”
A hearing for the controversial Self-Regulatory Organization (“SRO”) bill submitted by Representative Spencer Bachus(R – AL), Chairman of the U.S. House Financial Services Committee, is scheduled to be heard on June 6th at 10 a.m. EST.
Self-Regulatory Organization for Independent Investment Advisers Created by Law Professor and Students
June 02, 2012
The battle to add a Self-Regulatory Organization (SRO) for investment advisers is getting help from an unlikely source: the University of Mississippi Business Law Society. Students, with help from their professor, Mercer Bullard, started the Self-Regulatory Organization for Independent Investment Advisers (SROIIA). Students formed the organization to provide investment advisers an SRO tailored to their industry. The mission statement, as found on the organization’s website SROIIA, says that the organization is “seeking to become the preferred SRO for independent investment advisers by promoting a bona fide fiduciary standard, improving regulatory efficiency, and adopting a partnership approach in its relationship with advisers.” The executive management team of SROIIA is led by former and current Mississippi law students as well as two professors from the university, including Bullard, on the advisory board.
More Details of the Investment Adviser SRO Bill
May 12, 2012
As we have been discussing, Rep. Spencer Bachus, the Chairman of the U.S. House Financial Services Committee, recently released the Investment Advisers Oversight Act of 2012, which would create a self-regulatory organization (“SRO”) for investment advisers. The Investment Advisers Oversight Act would amend the Investment Advisers Act of 1940 to create a “national investment adviser association” which would be overseen by the U.S. Securities and Exchange Commission (“SEC”). This investment adviser SRO would be given the authority to propose its own rules, subject to SEC approval, and to discipline its members for any violations of current SEC rules.
